Was The CAFC Correct In Finding CHURRASCOS Generic For Restaurant Services?

On first glance, this decision appears to be an unexpected result especially in light of the prior registration owned by the Appellant for the word mark CHURRASCOS for the same restaurant services. However, when viewing general principles of trademark law, maybe the outcome is not so unexpected. Regardless of your opinion, perhaps the easiest way to understand this ruling is to conclude that the mark has become generic over time. The Appellant in this matter, Cordua Restaurants, Inc. (“Cordua”) owns five restaurants marketed under CHURRASCOS. The restaurants feature South American dishes, including chargrilled Churrasco Steak. Years earlier, Cordua applied to the United States Patent & Trademark Office (“USPTO”) for the mark CHURRASCOS in standard character format for restaurant and bar services and catering. CHURRASCOS, the word mark registered on the Principal Register on June 3, 2008 under Section 2(f) after showing the mark acquired distinctiveness.

A few years later, Cordua attempted to register CHURRASCOS for the same restaurant services, but in a stylized format and it was refused. Cordua appealed to the Trademark Trial and Appeal Board (the “Board”) and it affirmed the Examiner’s refusal on the grounds that the mark was generic for restaurant services. See In re Cordua Restaurants LP, 110 USPQ2d 1227 (TTAB 2014) [precedential]. Cordua argued that its prior registration should be prima facie evidence of the mark acquiring distinctiveness. However, the Board responded by stating that if the mark is highly descriptive, additional evidence is required to prove distinctiveness. Cordua appealed to the U.S. Court of Appeals for the Federal Circuit (“CAFC”). See In re Cordua Restaurants, Inc., 118 USPQ2d 1632 (Fed. Cir. 2016).

The CAFC affirmed the finding of the Board, holding there was substantial evidence to find the mark CHURRASCOS was generic for restaurant services. A generic term is a common descriptive name for a class of goods or services. The critical issue is whether the relevant consumer base primarily understands the subject term to refer to the class of goods or services in question. Proof of the public’s understanding of the subject term should be submitted into evidence from reliable sources such as dictionaries, online sites, publications, and newspapers. The USPTO bears the burden of proving that the mark is generic by clear and convincing evidence.

Cordua argued that the Examiner’s decision in 2008 to register the word mark CHURRASCOS should be binding due to issue preclusion. The CAFC did not agree, stating that a decision in an ex parte registration proceeding is different than a matter that is “actually litigated” in an opposition or cancellation proceeding. Thus, issue preclusion is not applicable. Moving forward with the analysis, the Court posed the question, is the term CHURRASCOS generic for restaurant services? It should be noted that the term Churrascos has a meaning in a foreign language that translates to English as “barbecue”. The Board could have posed the question, is “barbecue” generic when applied to restaurants. However, the Board did not rely on the doctrine of foreign equivalents. Instead, it determined that since the term Churrasco is a word used in the English language meaning grilled meat or steak, there was no need to involve the doctrine of foreign equivalents.

The Board and the Court relied on a general principle of trademark law that “a generic name of goods may also be a generic name of the service of selling or designing those goods” 2 McCarthy §12.23. In other words, the term will be considered generic if the relevant public understands the term to refer to a key aspect of the class of goods. This principle of law broadens the scope of what terms will be considered generic. In light of this precedential decision, trademark counsel should think twice before advising clients to move forward with highly descriptive or merely descriptive marks bordering on being generic.

This finding will impact future applicants who are attempting to brand under a term that is a key aspect of the class of goods or services identified in the trademark application. Some may consider this decision a deviation from prior holdings or a broadening of what is considered a generic term. Regardless of your opinion, the decision is likely to act as a deterrent for those applicants pushing the boundaries of descriptive terms. It will also remind trademark attorneys that our objective is to counsel our clients to adopt marks that fall within the fanciful, arbitrary and suggestive categories. This will allow our clients to develop stronger brands and reinforce the objective of trademark law which is to have one’s mark be distinctive and to function as a source indicator from the outset of use of the mark in commerce. If you have questions regarding the strength of your mark, please feel free to contact our firm for a courtesy consultation.